-Adds Detail To Version Transmitted At 1114 GMT
-McCafferty Expected CPI To Get Back To Target Spring 2013
-McCafferty More Dovish On Inflation Than MPC’s Latest Forecast

LONDON – The CBI’s Chief Economic adviser, Ian McCafferty,
has been appointed to replace Adam Posen on the Bank of England’s
Monetary Policy Committee.

Posen has been a leading dove on the MPC, spearheading the launch
of the second wave of quantitative easing. McCafferty, when preseting
the CBI’s most recent forecast, saw inflation returning to target
earlier than the MPC had predicted at the time.

With Posen leaving at the end of August and McCafferty starting in
September it means there will be no gap between the two terms.
McCafferty has been with the CBI, the employers’ body, for 11 years and
is a well known business economist.

“I’m extremely pleased that Ian has accepted this appointment. he
is a respected economist with industrial experience and he will be a
welcome addition to the MPC,” BOE Governor Mervyn King said.

John Cridland, CBI Director-General, said: “I am delighted that Ian
has been appointed to the MPC. At a time when the private sector is so
vital to the future of the British economy, it is good news that Ian’s
excellent understanding of the economy will be available to the Bank.

In his CBI role, McCafferty’s forecassts for the economy have not
been far away from those of the BOE MPC.

Presenting the CBI’s latest forecasts in May, McCafferty predicted
that inflation would return to around the MPC’s 2.0% inflation target by
Spring 2013. This was more dovish than the BOE MPC forecast in its May
Inflation Report.

The MPC predicted CPI would stand at 2.57% in Q1 and 2.32% in Q2
of 2013, only dipping below target in Q3.

He said inflation had been higher than he previously expected
because of high oil prices, but these have subsequently fallen sharply.

“It (inflation) will continue to come down. I think with the
economy growing only slowly and with wages as a result growing
relatively slowly, I think that does bring underlying inflation
conditions back under control so we can expect to see inflation back to
around the 2% bank target by the Spring of 2013,” McCafferty said.

While McCafferty typically commented for the CBI on changes in MPC
policy, he appears not to have commented on the MPC’s decision Thursday
to extend quantitative easing by Stg50 billion.

When the MPC sanctioned the previous round of QE in February,
McCafferty expressed skepticism about its impact on growth.

“This new round of QE should help support confidence, though the
direct stimulus to near-term growth is likely to be limited,” he said.

McCafferty was head of macroeconomics at oil giant BP before
joining the CBI and had a decade as City economist at NatWest Market and
Baring Securities.

Unlike Posen, and several others on the MPC, McCafferty does not
have a doctorate in economics.

He graduated from Durham University and completed an MA at the
University of Amsterdam. A French speaker, he has also worked in Paris
at the International Chamber of Commerce.

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[TOPICS: M$$BE$]